ABSTRACT
In international marketing there are factors which bear on the pricing decisions a marketer must take that do not exist in domestic markets, or that differ in some crucial dimension from domestic practice. They are brought about by the institutions and commercial customs that have evolved to facilitate the delivery and payment of goods and services across national borders as well as by factors in the environment very often specific to a given country. How marketers respond to these and how they use the different approaches available to them will also bear on pricing decisions made. As markets have become ferociously competitive, driven by globalization, so the need has grown to understand these factors that affect price in this still developing scenario. There is a grand experiment ongoing in the European Union (EU) in terms of the European and Monetary Union (EMU) which economists refer to as an ‘optimal currency area’. The theory of this makes the proposition that there are gains to be had from sharing a currency across borders, which also has considerable implications for pricing in the international market. Prices are often subject to negotiation and special skills are needed in negotiating across cultures. <inline-graphic content-type="black-white" xlink:href="<a href="https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9780203499528/a28c1649-9633-465f-a39c-0bc8876012be/content/light_B.tif" target="_blank">https://s3-euw1-ap-pe-df-pch-content-public-p.s3.eu-west-1.amazonaws.com/9780203499528/a28c1649-9633-465f-a39c-0bc8876012be/content/light_B.tif</a>" xmlns:xlink="<a href="https://www.w3.org/1999/xlink" target="_blank">https://www.w3.org/1999/xlink</a>"/>Learning Objectives
The objectives of this chapter are to:
illustrate the factors that escalate price to the foreign consumer;
examine the implications of quoting in the domestic currency and in the customer country currency;
identify the effects on pricing of the EMU in the EU;
evaluate the different approaches to pricing in an international context;
underline the importance of the negotiated price.
When you have completed the chapter you should be able to:
take account of the special factors that increase price in the foreign market in making pricing decisions;
demonstrate how to incorporate in these decisions the means by which exchange risk is mitigated;
make informed judgements in relation to pricing in the EU;
use pricing approaches appropriate to the market(s) concerned;
show awareness of the cross-cultural skills required in international price negotiations;
build up a price from a known cost to the consumer price in a market;
establish whether an acceptable price in a market can be met by working back from that price to production cost.
